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Forward on reverse - Building up reverse mortgage reserves

National Mortgage Professional
Sep 26, 2005

Homeownership on the decline among american families with childrenMortgagePress.comhomeownership rates, Center for Housing Policy, the National Housing Conference Although homeownership in the U.S. has soared to record highs, the rate for all families with children is actually lower than it was in the 1970s, according to a new study entitled Working Families With Children: A Closer Look at Homeownership Trends. Conducted by the Center for Housing Policy, the research affiliate of the National Housing Conference (NHC), the study also found that low- to moderate-income working families with children have experienced a particularly large decline in homeownership over the last two and one-half decades. These findings are at odds with what has been hailed as a decade of progress for the average American household, and point to the fact that working families with children, in particular, are increasingly struggling to make ends meet. Specifically, the homeownership rate for all families with children was 70.5 percent in 1978, but by 2001, this rate decreased to 68.4 percent. Among working families with children, the homeownership rate declined from 62.5 in 1978 to 56.6 percent in 2001. For comparison, 68.3 percent of all households owned their homes in 2003, increasing from 65.2 percent in 1978. Working families are defined as households earning less than 120 percent of the local median income, but more than the full-time equivalent of the minimum wage. The net decrease in the homeownership rates of working families with children that occurred between 1978 and 2001 translates into a more than eight percent decline from nearly 66 percent to about 58 percent in the proportion of low- to moderate-income children living in owner-occupied housing. These findings ultimately stretch beyond the housing market since extensive expert research has proven that children who live in owner-occupied homes are more likely to do well in school and are less likely to have behavioral problems. The overall impact of homeownership on children also appears to be even stronger among lower income families. The reduction in homeownership among working families with children occurred at the same time that their number, and their relative importance, were on the rise. In particular, the number of working families with children rose from 11.9 million in 1978 to 17.5 million in 2001. During that time, their share of all U.S. households also increased from 15.4 percent to 16.4 percent. The decline in the homeownership rate of working families cannot be explained simply by the increase in single-parent households. In fact, homeownership among couples with children also fell, dropping from 66.8 percent in 1978 to 63.2 percent in 1991 before reaching 64.2 in 1999. In 2001, the rate was 65.5, still below its pre-1980s level. In addition, the homeownership rates of both single parents and couples declined, so the decline cannot be attributed solely to changes in household type. It is likely that stagnant incomes and the rising costs of homeownership played important roles. In terms of the ability of working families with children to achieve homeownership, the level of home pr ices over the period tells part of the story. According to Census data, the median sales price of a new home in 1978 was $55,700, which was about four times the $14,258 median income of a working family with children. In 2001, the median new home cost more than $175,000 or five times the median income of $35,000. The fulltime minimum wage in 1978 was $5,512. By 1991, it had risen to $8,840 and by 1999, it was $10,712. For more information, visit www.nhc.org.
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